Proposed Business Property Relief reforms have thrown a spotlight on succession planning, and it’s limiting potential for trusts. But for those willing to think structurally, Family Investment Companies offer a potential route forward, the author argues.

The following article, which comes from Mary Perham, a private wealth lawyer at Charles Russell Speechlys, and Edward Robinson, legal director, examines the renewed relevance of Family Investment Companies in the light of the UK government’s changes to Business Property Relief as it affects inheritance tax. The proposed changes have already sparked anger and concern about the impact on family-run businesses. 

The editors are pleased to share these insights; the usual editorial caveats apply to views of guest writers. Remember that these articles are meant to fire up conversations, so get involved if you have comments and suggestions. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

There is a quiet shift underway in wealth structuring. For years, trusts have been the bedrock of succession planning, valued for their flexibility, asset protection and inheritance tax efficiency. Trusts remain valuable and they will continue to have a key role in succession planning, but with the government now pressing ahead with reforms to Business Property Relief (BPR), many are having to think more laterally. 

As currently drafted, the changes due in April 2026 will impose a £1 million ($1.34 million) cap on 100 per cent relief, with only 50 per cent relief available above that threshold. For business owners who have long relied on BPR to pass down trading interests tax-free, the implications are acute. 

On death or trust transfer, many estates will now face substantial IHT liabilities, even where the underlying assets remain squarely within productive enterprise that would currently be fully relieved.

The loss of trust efficiency
The reforms will mean that, post-April 2026, individuals who may otherwise have considered transferrng assets qualifying for BPR into trust to achieve controlled and assets protective succession will be limited to transferring only £1 million of that value every seven years without an immediate IHT charge at an effective rate of 10 per cent on value above that.

Further, within the trust there will be recurring IHT charges on its 10-year anniversary and exits. Accordingly, where business assets continue to be held trustees and the underlying company will need to scrutinise cash reserves, dividend policies and even investment strategy to fund these periodic liabilities.

In short, the post-2026 regime will make trusts more expensive to fund and to maintain. This will result in a far smaller opportunity for individuals to maximise estate planning relating to their, business assets particularly before a liquidity event.

Enter the FIC
It is partly in this context that FICs are re-emerging as a credible alternative; not a tax shelter, but a governance tool for families seeking long-term stewardship of capital.

A FIC is a private company established to hold and grow family wealth, often funded via founder loans or subscriptions, with shares distributed among family members or trusts. Critically, it allows founders to retain meaningful control, as directors, as voting shareholders, or via bespoke articles of association. Where trusts can feel opaque and remote, FICs offer business owners a familiar lexicon: dividends, share classes, board resolutions.

For many entrepreneurs, that familiarity matters. The corporate form is intuitively understood, legally robust and versatile. FICs can accommodate multiple share classes, enabling a tailored approach to income, capital, and control. They allow capital to be rolled up and reinvested without triggering immediate tax friction, and they can invest across asset classes, from managed portfolios to private equity or even future family ventures.

A structure aligned with modern succession
The value of FICs is not solely fiscal. At a time when intergenerational wealth is increasingly interwoven with family governance, FICs allow founders to model values as well as balance sheets. Some use them to fund startups by the next generation, with oversight. Others embed philanthropic aims, or link governance rights to education and engagement. The structure encourages families to think deliberately about how wealth is used, not just transferred.  

Some families use this as a catalyst for creating a family charter – a non-legally binding document in which they can collectively set out their goals and aspirations for the future of the FIC and how they will conduct their own affairs to align with those objectives. For some families it is a rite of passage that children reaching adulthood will be invited to sign the charter and be educated on how the FIC operates.

For lawyers and advisors, the appeal lies in the precision FICs can give. The governing documents can be tailored to prevent fragmentation, protect against divorce or incapacity, and establish mechanisms for dispute resolution or buybacks. If a trust is a flexible envelope, a FIC is a bespoke machine, potentially more complex to design, but with far greater clarity in operation.

Where trusts have been used to harness BPR or other relieved assets (in their more limited capacity after April 2026) they can often have a key role as shareholder of the FIC providing for future generations of the family and bringing the family succession planning together in one structure.   

Not a panacea, but a pragmatic choice
To be clear, FICs are not without their downsides. They are taxable entities, subject to corporation tax (currently capped at 25 per cent) and dividend tax on extraction. The potential for double taxation, first at corporate level, then at shareholder level, means that they are best viewed as long-term vehicles for growth, not short-term income generators. They also require careful structuring at the outset.

Shareholder disputes, if poorly managed, can be corrosive. Exit strategies should be modelled early on.

There are also broader policy risks and future reforms which could alter their relative advantages. However, their tax position is grounded in well-established corporate principles which does provide a level of resilience and predictability.

The road ahead: planning before and after April 2026
With less than a year before the new BPR regime comes into force, business owners should be reassessing their estate planning architecture now. For some, trusts will remain valuable. In fact, ahead of April 2026 it is likely that there will be a significant rise in the creation of trusts because there is a small window of time to bank BPR before the rules change. Individuals holding BPR assets should be actively considering this option for asset protective controlled gifting. 

For those who did not capture BPR when they had the opportunity or come April 2026 for those entering a liquidity event, or contemplating a more engaged succession strategy, FICs deserve serious consideration.

This is not about tax arbitrage. It is about using corporate structures to preserve capital, embed family governance and plan for generational change, in a way that reflects both fiscal prudence and commercial instinct.

If the reforms have a silver lining, it is that they compel families to confront difficult questions earlier: Who will control the capital? How will value be created and shared? And what kind of structure is needed to support both?

For a growing number of families, the answer lies not in retreating from the corporate world, but in adapting its tools for private stewardship. In that, the Family Investment Company may prove pivotal.